How to Respond to a Civil Investigative Demand

By Richard NewmanNovember 5, 2015

Formal government investigations may be conducted through Civil Investigative Demands, which are judicially enforceable demands for information and documents. Similar to discovery requests in a civil lawsuit, CIDs specify what information and categories of documentation are being sought. In contrast to discovery in a civil lawsuit, a CIDs investigative subpoena power presents various strategic hurdles that companies must overcome when navigating its way through aggressive inquiries pertaining to consumer laws.

Although a CID should be taken seriously, do not panic. Do not automatically assume that your company is a “target.” Not all recipients of a CID are necessarily targets. In fact, CIDs are often issued to companies with relevant information pertaining to third-parties that are themselves the targets of a regulatory investigation. The reality is that any company that the FTC or the CFPB believes may possess helpful information or documentation regarding a violation of consumer protection laws could potentially receive a CID. 

Often, regulators will not explicitly state whether your company is the target of an investigation. The  FTC or CFPB will, however, express what practices it is investigating and what statutes may have been violated. The CID itself will identify the purpose of the investigation on its face in one or two sentences. 

The requests themselves may also be illuminating. However, requests are typically quite broad and can range from contracts, correspondence and prior consumer complaints, to the credentialing of third-party marketing partners, policies and training. So, deciphering the true purpose of the investigation from the requests alone may be challenging. In reality, regulators may not always know exactly what they hope to find during an investigation. A lead generation regulatory defense lawyer with experience resolving local, state and federal consumer protection investigations will often be able to arrive at a well-reasoned conclusion on the target issue.

Upon receipt of a CID you must act quickly because the clock starts to tick immediately upon service. Critical deadlines pertaining to production, meeting and conferring with staff counsel, and for petitioning to limit or quash the CID must be calendared. The failure to act appropriately from the beginning will not only prejudice a company’s ability to effectively respond, it could negatively impact continued business operations.

Promptly contact experienced counsel in order to evaluate what staff attorneys have been assigned to the investigation, the deadline for production and the scope of the requests. Developing and implementing a response plan should be a priority.

The feasibility of a complete response and the associated burdens in anticipation of the mandatory “meet and confer” must be evaluated quickly. Those that are most knowledgeable regarding responsive information, including technology personnel, should be assembled. 

The meet and confer is designed to discuss and attempt to resolve all issues regarding compliance with the CID. As a general rule, the recipient of a CID from the CFPB must meet and confer within 10 days of service. The FTC has a similar rule, although the Commission tends to be a bit more flexible regarding a good faith extension.

This meet and confer process is a critical one and you will have the burden to convince a regulator why the requests are overly broad or unduly burdensome. Therefore, in addition to ensuring that a company-wide “litigation hold” is implemented to preserve potentially relevant documents (ESI and paper), be prepared to evaluate the nature, location, accessibility and expense of locating responsive information. Doing so efficiently will go a long way to controlling what is produced and associated costs.

The CID process moves rapidly and regulators may not freely dole out extensions. Typically, interrogatory responses are expected first while more burdensome document requests may be provided on a “rolling” basis.

Whether your company is a target, the bases why trimming the scope of the CID may be reasonably required, the applicable time period, electronic record database search terms, and appropriate objections and extensions of time to search/respond are amongst the topics discussed and negotiated during the compulsory meet and confer. It is in your best interest to make a regulator’s job easier. The less time that is spent on your matter during the course of the investigation, the better. 

Your attorney is an advocate whose ultimate goal should be to utilize the information produced in order to prepare a persuasive written response and convince the regulatory authority to amicably close the investigation. The manner in which your company responds to a CID will influence whether the FTC or CFPB investigation evolves into an enforcement proceeding or a favorable resolution and closure. Navigating an investigative demand requires tactical experience, healthy working relationships with regulatory agencies and diplomacy. 

Minimizing the risk of ever receiving a CID requires preventative planning. The foregoing should be of interest to any company or individual that is the subject of a regulatory investigation or enforcement action. If you require assistance responding to CID or other regulatory inquiry, or if you would like to discuss the avoidance of investigation triggers, please contact the author.

Information conveyed in this article is provided for preliminary informational purposes only and does not constitute, nor should it be relied upon, as legal advice.  No person should act or rely on any information in this article without seeking the advice of an attorney regarding how best to respond to a Civil Investigative Demand.

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